Hans Sennholz was a great champion of the Austrian Theory of the Trade Cycle and also the Misesian view of money. He was a proponent of the gold standard, and this is his aggressive defense of Austrian theory against monetarism and supply-sideism. In fact, Money and Freedom is the most systematic Austrian criticism of the supply siders available. He uncloaks their free-market rhetoric to expose an inflationist core that is really Keynesian in its heritage.
The core of his argument concerns the centrality of the money question to the future of freedom, and here he is at his most eloquent.
Most striking for Austrians is a subtle change in Sennholz’s thinking on sound money itself. Instead of a centralized solution that would convert the very definition of the dollar–a solution he favors but regards as politically impossible–he proposes something very different and challenging: complete decontrol of laws concerning money production and use. With the repeal of coinage restrictions, legal tender laws, and decontrol of monetary contracts, he imagines new currencies circulating alongside the dollar.
The monograph is short and powerful–and his solution is worth taking a very careful look at. It might have more plausibility now than ever before.
{ 4 comments }
An interesting piece of a review from Cato:
http://www.cato.org/pubs/journal/cj6n2/cj6n2-18.pdf
Take from that what you will.
I will make it a point to read Sennholz. From the description, it sounds as though his “take” is very similar to mine.
The major point to be understood of the Gold Standard is that it’s been a failure: not because of any failure of the standard itself but because of the relative ease with which governments of the past have been able to
subvert and, finally, abandon it. Mises recognized this but presented not a single idea to do anything but repeat the past and hope we’d “do better this time.”
Give me leave to rewrite the Constitution (to the tune of about a hundred words or less) and I’ll produce a monetary system that’s nearly indestructable and that would, within time, become universal. One that no government would (or even could) manipulate. One in which gold would be money but which would admit of just the right quantity of money-substitutes automatically, while preventing, without any laws on the subject, resort to “fiat” in any form whatsoever.
Looks interesting, will have a read.
I note that Robert Murphy’s study guide to Human Action appears to have been completed – will that be published soon?
Does the gold standard have to be all or nothing? What prevents a bank from recording its deposits as gold while it’s customers use debit cards for daily transactions at a dollar rate fixed daily? If the law prevents it, could it not be changed? If such a bank already exists, where so I can get an account?
The bank would not need to offer a savings rate, the gold price itself would take care of that.
Comments on this entry are closed.